cottesloe – PropertyESP

Coastal living the new black

Despite the resistance by coastal suburbs to welcome apartment living into their community – the research from the WA Apartment Advocacy has clearly shown that this status is going to have to change – and soon.

Of the 155 apartment owner occupiers surveyed, 15% had been living in a coastal location before then moving into their apartment (19% living on the coast). However when asked where they would choose to live next time – 70% stated an apartment and 49% stated a coastal location. 44% also indicated they would choose riverside. This was evenly dispersed across all age groups.

Of the 113 renters interviewed, 11% had been living on the coast and 14% moved into a coastal apartment. But when asked where they would choose to live next 73% stated an apartment and 47% demonstrated a preference to coastal locations.

Of those living in the inner city – the owner occupiers showed a movement away from this address with a drop of 61% to 50% as this being their preferred location.

With Perth’s apartment market still very young, and limited supply in restricted locations, Perth apartment livers have chosen the best from what is on offer.

But ultimately what they want is access to the coast – which up until now has only been available to the privileged.

Councils that have therefore chosen to listen to the 5% of their population who reject apartment living have quite obviously chosen to ignore the majority who want this choice (and rightly so) for their home.

It is a message that Councils and Government will now need to start listening to.

At PropertyESP we are glad for this intelligence which raises the argument for permitting apartment living in key locations such as Trigg, Scarborough, Cottesloe and so forth. Because without it – all we hear are the nay sayers. But now there is a larger voice speaking up – and they are saying yay for choice!

The higher they climb, the more likely they will fall

In our last post, we took a closer look at resales in the Western Suburbs. Unchanged, we were seeing growth rates of 7% per annum. Renovated and extended, growth rates were higher – 21% per annum.

But not all properties change hands at a profit. Some make a loss. What sparked our interest in Cottesloe, Dalkeith and Nedlands in the first place was a recent article showing differences between the suburbs in profits and losses.

We’ve long had an interest in resales, finding them the best indicator of the underlying growth of a suburb. And as we saw in last week’s post, even properties resold in the price stable years had grown in value.

To get a good handle on resales, we have focused our analysis on those properties that were largely unchanged between sales, to more accurately reflect underlying market trends. We have also removed from the data any transactions that could affect the credibility of the data e.g. divorces etc.

Over the longer term, as expected, after being held for 5.7 years on average, 91% of properties were resold at a higher price than they were bought for.

However, since 2011, each suburb has seen an increase in the proportion of properties sold at a loss, reflecting the larger impact of properties bought during the peak and resold after the market had come down from that peak.

In examining the data, we realised that something else was at play. Examining resales, it is clear that the houses that were bought for under $1m still tended to gain in value, but that losses were sustained in houses originally bought for $2m plus.

In recent years, when house prices have come off the boil, losses were more likely to be sustained for premium properties than for those that were more moderately priced.

There’s still money to be made in Perth’s premium suburbs. But like anything, your profit depends in part on your original investment. And as this data surely shows it is wise to do your homework before purchasing a premium home in a premium suburb!

This is what PropertyESP does best – we get into the nitty gritty like no other agency in WA. Next time you are thinking about your price point for a project contact PropertyESP – we will help maximise your sales – guaranteed!

The changing face of suburbs and the impact on sale prices

The majority of properties change hands with minimal upgrades in between sales. Maybe a new coat of paint, maybe new curtains, some new plants in the garden. But otherwise, they’re pretty much the same as the day they were bought … just a little older.

In mature suburbs, however, we’ve long known that properties are often renovated and extended, and this has an impact on the sales prices being achieved as larger properties generally attract higher prices.

Our recent analysis of residential sales in Cottesloe, Dalkeith and Nedlands over a period of around 20 years has given us a good insight into the changing face of these suburbs and its impact on property prices.

Firstly, some context….

Looking solely at houses, the chart shows the strong growth in median house prices over the longer term in Cottesloe, Dalkeith and Nedlands. And they grew more strongly than greater Perth.

Focusing on the more recent sales, when prices were relatively stable, the following chart shows a distinct preference in our three suburbs for more recently constructed houses. This tends to beg the question – is the market’s love affair with older properties waning?

Taking a closer look at property size by build year, from the following chart we can see that the house sizes have changed over time. 2 bed and 3 bed houses were the most popular house sizes during the 1900-1949 period. However, by the 1980-2015 period, 4 bed houses were the most popular. And any 3 bed houses built during those years came with 2 bathrooms. Knowing that house prices are affected by property size, we can see how the higher prices being achieved by the more recently built houses are also driven by the newer houses being larger in size.

In reality, there were few houses built early last century with 4 and 5 bedrooms. Many of those we see in the previous chart were smaller houses extended to meet the needs and expectations of modern families. This, too, has an impact on median sale prices. Generally we only see the price of the house sold. We don’t realise that the previous time it was sold, it was a much smaller property.

The best way to examine the impact of this is to look at resales, when a property is sold once, then sold again.

From 1990-2015, 78% of the sales in Cottesloe, Dalkeith and Nedlands were of properties that were sold more than once during the period. 55% of resales were sold twice during that period. 1 property changed hands 9 times.

86% of those properties were sold “largely unchanged”. 9% of properties were expanded (increase in number bedrooms and/or bathrooms) between sales. Demolitions and developments of vacant lots (newly developed or demolished) accounted for the rest.

Focusing on 2011-2015 sales, those properties that were resold largely unchanged had made gains (since their previous sale … which could have been as far back as 1990) of 7% per annum.

In contrast, those that had been renovated and extended made gains of 21% per annum on average.

Renovations and extensions, property styles and trends are just some of the things that impact on median sale prices. That is why it is important to look behind the broad trend to examine what is influencing prices, aside from a general increase in the value of land.

It is this extra detail that PropertyESP is known for and which can benefit your next project. For more details contact Samantha Reece on 0452 067 117.